On January 1, 2010, a city entered into the following leases for equipment items. Each of the leases qualifies as a capital lease. Initial payments are on December 31, 2010. An interest rate of 12 percent is viewed as appropriate. No bargain purchase options exist.
|
Fund |
Annual Payments |
Total Payments |
Present Value of Total Payments |
|
General (10-year life) |
$3,000 |
$30,000 |
$19,000 |
|
Enterprise (4-year life) |
9,000 |
36,000 |
30,600 |
a. Prepare journal entries for the year 2010 for both of these leases for government-wide financial statements.
b. Prepare journal entries for the year 2010 for both of these leases for fund-based financial statements.